Low-deposit mortgage choice at 17-year high

First-time buyers now have more high loan-to-value mortgages to choose from, and increased time to secure deals.

The number of first-time buyer mortgages on the market has risen month-on-month, according to the latest data from the Moneyfacts UK Mortgage Trends Treasury Report.

Availability for mortgages able to finance up to 90% loan-to-value (LTV) rose in the month to April from 772 to 845, while the number of 95% LTV deals increased to 442, up from 395 the month prior.

This marks a 17-year high for both figures, as the amount of 90% and 95% LTV deals was recorded at 957 and 575 respectively in March 2008.

“The Government has been clear that it wants lenders to do more to boost UK growth, and so a rise in product availability for aspiring homeowners is a healthy step in the right direction,” commented Rachel Springall, Finance Expert at Moneyfactscompare.co.uk.

But, as Springall suggests, there is still “room for improvement” considering the number of 95% LTV mortgages accounts for just over 6% of the total amount of fixed and variable deals available to borrowers.

Indeed, the overall market saw also a rise in availability, growing from 6,684 at the beginning of March to 6,870 by the start of April.

Falling mortgage prices

Alongside having more deals to choose from, mortgage affordability has also improved. Across all LTVs, the average two-year fixed rate fell month-on-month from 5.39% to 5.32%; for those after a longer five-year fixed term, the average rate dropped from 5.22% to 5.18% in the same period.

The average two-year rate has been higher than its average five-year counterpart since October 2022, though the gap has been gradually narrowing since then.

“Fixed mortgage rates are down year-on-year, and slowly the market is seeing the average two-year fixed getting closer to its five-year counterparts, now with a rate gap of just 0.14%,” explained Springall.

At 60% LTV, where rates are generally lower compared to higher lending ratios, the difference between the average two- and five-year rate is now only 0.10% as of 1 April.

Meanwhile, first-time buyer mortgages saw notable cuts, with the average two-year fixed rate for a 95% LTV deal falling to 5.81% over the month, its lowest point since October 2022.

Is now a good time for a new a deal?

March saw relative stability in terms of the average shelf-life of a mortgage, which rose from 16 to 21 days by 1 April, largely due to a lack of movement in swap rates.

The decision from the Bank of England’s Monetary Policy Committee (MPC) to hold the base rate at 4.50% in the same month likely added to this steadiness, and with the next announcement not until May, it could see this trend continue over April.

Despite this, prospective borrowers will no doubt be hoping for a cut next month in order to take advantage of potentially lower rates, though as Springall points out, “numerous murmurings of a potential cut to surface in the coming months could be delayed if inflation gets out of control”.

However, recent economic turmoil as a result of US trade policy has since seen swap rates fall, which in turn has seen lenders already begin to slash fixed rates across an array of products.

It’s therefore worth shopping around to make the most of these lower prices, particularly if you’re currently paying your lender’s revert rate, but it’s important not to be influenced by these headline rates alone.

With this in mind, if you need help working out which deal is best for your situation, you may wish to seek out professional advice.

Should I speak to a mortgage broker?

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